UK's Bunzl eyes more acquisitions after profit rises

Mon Feb 24, 2014 6:49am EST

By Li-mei Hoang

LONDON Feb 24 (Reuters) - British business supplies distributor Bunzl is looking for more companies to buy after acquisitions helped its profit rise 17 percent last year, beating forecasts.

The group, which distributes consumables such as carrier bags, food packaging and hygiene products, spent 295 million pounds ($492.3 million) on acquisitions in 2013, its highest level since 2004.

Analysts estimate Bunzl may spend around 300 million pounds per year on acquisitions for the next four years.

Shares in Bunzl were 5.4 percent higher by 1146 GMT on Monday, the biggest gainers in the blue-chip FTSE 100 index .

"There is plenty of firepower. We think there will be a good flow of opportunities. We've averaged the last eight years at 150 million pounds, so I would be disappointed if we didn't spend at least what our eight-year average has been," Chief Executive Michael Roney said.

The company generated 302 million pounds of cash last year up from 67.1 million the previous year, putting in a strong position to fund future deals.

Net debt rose 15 percent to 849.5 million pounds.

Shore Capital analyst Robin Speakman pointed to the increase in Bunzl's operating margin, which rose to 6.8 percent from 6.6 percent, and the stronger cash flow. "It's just a great story, a solid company," he said.

Bunzl said it had agreed to buy a company in Germany and another in the Czech Republic.

Roney said the acquisition of Bäumer and its related firm Protemo represents the company's first steps into the cleaning and hygiene and healthcare sectors in Germany and was a good base to expand into that market.

Bunzl has also purchased Oskar Plast, which sells a variety of disposable packaging products to customers throughout the Czech Republic including retail chains, food processors and other distributors.

Pre-tax profit rose to 372.2 million pounds in the year ended Dec. 31, beating an average forecast of 344.4 million, a Thomson Reuters poll of 18 analysts. Revenue rose 12 percent to nearly 7 billion pounds.

The company raised its dividend by 15 percent to 22.4 pence a share.

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